“Entrepreneurs should think about how to unlock the narrative from their product or service. What is the true story they are trying to tell? What types of stories do they want their users to share? People share stories about products or services when their interactions are personal, memorable and emotional in one way or another. Stores are what gets shared, amplified and most stories are memorable in ways that facts, features and stats never will be.”

“Write a pitch deck for the people you want to hire first, and investors last. When starting out, the first audience for your deck should be your founding team. Use it to get on the same page. The next audience is your first few hires, they should believe in the vision to join. The final audience is investors and it turns out they are no different from a great hire in terms of what motivates them to believe.”

TYPES OF FUNDING

TYPES OF FUNDING

TYPES OF FUNDING

TYPES OF FUNDING

TYPES OF FUNDING

Quality over quality / long decks Explain product Get to the point

Put your VC to work [Any others?]

https://www.udemy.com/u/davemcclure/

Add brad feld Jason mendhelson

No Derivatives Long answers Demos that don’t work Quality over quality / long decks Explain product Get to the point

4.
• Each investor views the world differently so this
guide is far from definitive.
• I couldn’t include every accelerator, angel or VC.
• I’m not a lawyer so consult with one before you
raise.
• The focus is seed but many lessons apply for
Series A.
• These slides are used for a class I teach at
General Assembly.
DISCLAIMERS
RRE VENTURES | RAISING SEED CAPITAL
3

7.
JOHN BORTHWICK
RRE VENTURES | RAISING SEED CAPITAL
“Remember that funding is a means to an
end, not an end in of itself. The end is
building a product, building a community
and building a business. Raising money
can be a challenge – just remember it’s
not the end. It’s the beginning, it’s the
starting point. Now you have to build.”
6

11.
PAUL GRAHAM
RRE VENTURES | RAISING SEED CAPITAL
“The other time not to raise money is
when you won’t be able to. If you try to
raise money before you can convince
investors, you’ll not only waste your time,
but also burn your reputation with those
investors.”
http://paulgraham.com/fr.html 10

16.
HERE’S THE PROOF
RRE VENTURES | RAISING SEED CAPITAL
15Source: http://info.crunchbase.com/2013/12/16
The average
successful US
startup has raised
$41M and exited at
$242M
The average
successfully acquired
US startup has
raised $29.4M and
sold for $155.5M
The average IPO-
bound startup raised
$162M before going
public

17.
JAKE LODWICK
RRE VENTURES | RAISING SEED CAPITAL
“Many entrepreneurs underestimate the
time and energy that goes into
fundraising. I wouldn’t expect to
accomplish much creatively or technically
until the raise is completely wrapped.”
16

24.
BEN LERER
RRE VENTURES | RAISING SEED CAPITAL
“Try not to fall in love with a firm – focus
more attention on the partner leading the
deal. Ultimately that partner will be the
person you have to deal with so raising
from a great firm but putting someone on
your board that you don’t love won’t end
up working out.”
23

26.
ACCELERATORS
RRE VENTURES | RAISING A SEED ROUND
25
A three to six month “startup boot camp” that provides mentoring, office
space and access to capital in exchange for 3-6% of common stock.

27.
NOTABLE SEED FUNDS
RRE VENTURES | RAISING A SEED ROUND
26
Seed funds tend to invest $50K - $750K in an institutional seed round
which is usually up to $1.5M. These funds invest together as a syndicate.

28.
VCs w/ SEED DEALS
RRE VENTURES | RAISING A SEED ROUND
27
VCs typically lead $3M-$10M+ Series A rounds but some invest $50K -
$1M in seeds to back great founders and / or learn about emerging tech.

29.
CORPORATE VCs
RRE VENTURES | RAISING A SEED ROUND
28
Corporations often have funds that invest in startups for strategic and / or
financial reasons. These funds typically focus on Seed and Series A.

37.
GINA BIANCHINI
RRE VENTURES | RAISING SEED CAPITAL
“Find a tribe of fellow entrepreneurs a little
ahead of you in progress who will give you
honest feedback and clear direction on
your pitch and – more importantly – the
progress you need to show in order to
raise money in the first place. The pitch is
nice but the progress is critical.”
36

41.
SET ROUND SIZE
RRE VENTURES | RAISING SEED CAPITAL
Estimating the amount of capital you’ll need requires more art than
science. Here are some tips to keep in mind during your quest.
1. Runway: Raise enough capital to give yourself 18 months. Keep in
mind it will likely take 3-6 months to raise a Series A.
2. Dilution: Every time you raise a round, try to sell no more than 10-
25% of the company.
3. $ Target: Set a modest raise amount. It’s always better to nail your
target, say you’re “oversubscribed” and then increase the size of
round depending on investor interest and terms / dilution.
40

42.
MIKE KARNJ
RRE VENTURES | RAISING SEED CAPITAL
“Think about your next milestone and
work backwards from there to determine
how much money you need to raise.”
41

43.
KNOW YOUR BRAND
RRE VENTURES | RAISING A SEED ROUND
Your brand equals the sum total of positive and negative interactions that
partners, customers and employees have with your company.
42
“In this ever-changing society,
the most powerful and
enduring brands are built from
the heart. They are real and
sustainable. Their foundations
are strong because they’re
built with the strength of the
human spirit, not an ad
campaign.”
-Howard Schultz, Starbucks

44.
TINA SHARKEY
RRE VENTURES | RAISING SEED CAPITAL
“Entrepreneurs should think about how to
unlock the narrative from their product or
service. What is the true story they are
trying to tell? What types of stories do
they want their users to share?”
43

45.
CRAFT YOUR STORY
RRE VENTURES | RAISING A SEED ROUND
The “story” behind your company and product is often one of the most
important things an investor will want to know. Don’t underestimate it.
“It’s not what you do, it’s why you do it.”
-Simon Sinek
• What was the impetus for starting
the company?
• Why are you obsessed with
solving this problem?
• How did the founders meet and
decide to partner?
• Why are you willing to sacrifice
years of your life to work on this?
• What is your cause, your belief?
44

46.
GEORGE PETSCHNIGG
RRE VENTURES | RAISING SEED CAPITAL
“Write a pitch deck for the people you
want to hire first, and investors last. When
starting out, the first audience for your
deck should be your founding team. Use it
to get on the same page. The next
audience is your first few hires, they
should believe in the vision to join. The
final audience is investors and it turns out
they are no different from a great hire in
terms of what motivates them to believe.”
45

49.
NEIL CAPEL
RRE VENTURES | RAISING SEED CAPITAL
“Get to the point in the first few slides.
Don’t wait to get it perfect – you won’t.
Additionally, practice beyond belief. Keep
practicing – sell a story! Be amazing.”
48

52.
YOUR OBJECTIVE: FOMO*
RRE VENTURES | RAISING SEED CAPITAL
51*Fear of missing out
Your goal throughout the process should be to create excitement,
demand and scarcity for your round. Investors often move in packs.

53.
FIRST IMPRESSION IS KEY
RRE VENTURES | RAISING SEED CAPITAL
Most VCs usually form an opinion of the founder and opportunity within
first 10 minutes of a pitch. Early stage investors generally look for:
Traction You + Team
Social Proof Product
52

56.
DAVID EISENBERG
RRE VENTURES | RAISING SEED CAPITAL
“Don’t be afraid of sharing your flaws in
your business, market, strategy or team.
Investors would rather back an
entrepreneur who is honest, who knows
her flaws, and who has a reasonable
hypotheses about how she might
overcome these challenges with more
resources and time. ”
55

57.
WHAT I LOOK FOR
Complementary Team Story & Purpose
Differentiated Product Some Traction / Proof
Emerging Markets
RRE VENTURES | RAISING SEED CAPITAL
Distribution
56
When evaluating super early stage investments there are a number of
things that I look for and place value on. Here are some them:

59.
WHAT I LOOK FOR (CON’T)
‘Action Not Analysis’ Strong Culture
Venture Capital
Data Driven Hustle / Hacking
Customer Obsession
RRE VENTURES | RAISING SEED CAPITAL
Great Design
58
Here are some additional things that I look for and place value on when
meeting with seed stage companies.

60.
QUESTIONS TO ASK
RRE VENTURES | RAISING SEED CAPITAL
1. What are the next steps in the process?
2. What concerns do you have?
3. How much time do you typically spend with your
companies?
4. Can you walk me through your decision making process?
5. How do you think you can help our company?
6. Do you lead and / or follow?
7. What’s your typical check size?
8. How does your firm think about follow on investments?
9. Is there any additional information you’d like to see?
10. Which investors do you enjoy working with?
59
During the process make sure you carve out enough time to learn about
the firm, its process and how they think about your opportunity.

61.
THINGS TO AVOID
RRE VENTURES | RAISING SEED CAPITAL
As I mentioned earlier every investor is different but there are some
general things to avoid throughout the process.
• Product demos that don’t work
• Derivative product and positioning
• Long answers filled w/ buzzwords
• Trying to have all the answers
• Long pitch decks
• Don’t have clear raise amount
• Asking for investor intros after one passes
• Overemphasizing PR and press
• No product team in place
• Pitching different partners in firm after a pass
• Bringing non-founders to 1st meeting
• Too many emails / follow ups
60

62.
AYAH BDEIR
RRE VENTURES | RAISING SEED CAPITAL
“Never change your pitch to tell an
investor what they want to hear. While it
might get their attention in the short term,
you quickly won’t be able to keep up an
alternate story, or if you did, you’ll end up
with the wrong investor.”
61

64.
YOUR ACTION ITEMS
Debrief w/ Team Send VC Requests Review Pitch Notes
Note Questions / Issues Edit Pitch Deck Update VC Pipeline
RRE VENTURES | RAISING SEED CAPITAL
63
Immediately following each pitch session there are some best practices
you can implement which should help you throughout the process.

65.
Terms
DECISION TO CLOSE
RRE VENTURES | RAISING SEED CAPITAL
64
Once you have a signed term sheet in place, there are a number of final
steps you will need to complete before getting back to work.
Negotiate
Term Sheet
Build Investor
Syndicate
Review
Docs
Sign &
Wire
Legal
Diligence
Usually four to twelve weeks

66.
JARED HECHT
RRE VENTURES | RAISING SEED CAPITAL
“Assume everything that can go wrong will
go wrong so have a plan B, C and D.
Nothing is ever done until the money is in
the bank.”
65

67.
SEED FUNDING VEHICLES
RRE VENTURES | RAISING SEED CAPITAL
66
When a startup raises money, one of three financing instruments are used
and which one is always specified in the term sheet.
Preferred Equity SAFEConvertible Debt

68.
CONVERTIBLE DEBT
RRE VENTURES | RAISING SEED CAPITAL
67
Source: http://www.avc.com/a_vc/2011/07/financing-options-convertible-debt.html
Convertible debt (A.K.A Convertible Note, A.K.A. Convertible Loan) is when a company
borrows money from an investor or a group of investors and the intention of both sides is
to convert that debt to equity at some later date.
 Speed
Simpler terms and less paperwork so
can close within weeks
 Cost
Cheaper than equity from a legal
perspective
 Control
Founder retains majority of voting
stock
 Valuation
Delays valuation discussion unless
note is capped
Source: http://techcrunch.com/2012/04/07/convertible-note-seed-financings/
Key Terms/Elements Why Convertible Debt?
 Discount
The % reduction in price the debt holders
will get when they convert into equity in the
future
 Valuation Cap
A valuation ceiling on the conversion price of
the debt (common for seed deals)
 Conversion
Point in time when holders of the debt will
convert their investment into equity (typically
occurs in the first equity funding round
following the convertible debt issuance)

77.
IN SUMMARY
RRE VENTURES | RAISING SEED CAPITAL
76
Raising any amount of capital is never easy. You’ll hear “no” more than
you’ll hear “yes.” For many of you it will be a long but rewarding process.
• VC is just one financing option to consider
• Raise to accelerate growth
• Investors come in difference sizes and flavors
• Prepare, work your ass off and hustle
• The real work begins after you close your round
• Take advantage of resources on the web
• The real work begins after you raise